Plunging lira prompts Central bank strategy rethink

Plunging lira prompts Central bank strategy rethink

The Turkish lira remains on the downward slope today in its longest running decline since 1996.

After eleven continuous days, the lira hit a new record low at 2.39 against the US dollar, unaffected by Central bank’s efforts to buoy it up by ploughing US$ 3 billion into the foreign exchange market.

Central bank announced this afternoon that it will be holding an extraordinary meeting on Tuesday to discuss the present situation, which announcement caused the lire to rise against the dollar at 2.33.

The lira has been in a steady decline following market reaction to news of corruption scandals and the resulting government upheaval.

The current value of the lira is now half its value against the dollar when it was at its peak six years ago, severely impacting a nation which relies heavily on imports.

Economists estimate that Central bank’s net foreign exchange reserves stand at around US $34 billion, meaning that it can sustain dollar sales at current levels for weeks rather than months although the bank has said that all of its reserves, including those held with it by commercial lenders, could be tapped if needed. Its gross reserves stood at US$107 billion as of last Friday.